India's industrial engine sputtered in October, with growth slowing to a crawl and hitting its weakest pace in over a year. The latest official data reveals a sharp deceleration in the country's industrial activity, raising concerns about the momentum of the economic recovery.
Key Sectors Drag Down Overall Performance
According to the Index of Industrial Production (IIP) data released by the Ministry of Statistics and Programme Implementation, industrial output expanded by a mere 0.4% in October 2024. This marks a significant drop from the revised growth of 5.8% recorded in September and represents the lowest growth rate in 13 months.
The poor showing was primarily due to a contraction in three critical sectors:
- Power Generation: This sector saw a decline of 2.4% compared to October of the previous year.
- Mining Output: Mining activity contracted by 1.2%.
- Manufacturing Sector: The largest component of the IIP, manufacturing, grew at a negligible rate of 0.1%, providing almost no lift to the overall index.
Use-Based Analysis Shows Widespread Weakness
A deeper look at the use-based classification of goods paints a picture of broad-based weakness across demand segments. The production of primary goods contracted by 1.3%, while capital goods, a key indicator of investment activity, also shrank by 1.3%.
The output of infrastructure or construction goods grew by a modest 2.6%. Consumer goods showed a mixed trend: durable consumer goods (like appliances and vehicles) grew by 3.3%, but non-durable consumer goods (fast-moving consumer goods) contracted by 1.4%, suggesting subdued demand for everyday items.
Context and Implications for the Economy
The dismal October numbers stand in stark contrast to the more robust growth witnessed in the same month last year, when IIP had expanded by 11.9%. The cumulative growth for the April-October period of the 2024-25 fiscal year now stands at 5.6%, down from 6.9% in the corresponding period last year.
This sharp slowdown in industrial production is a critical economic indicator that policymakers will watch closely. It suggests potential headwinds from both the supply side, as seen in mining and power, and the demand side, reflected in the consumer non-durables segment. The data may prompt a reassessment of growth forecasts for the current fiscal year and highlights the need for sustained efforts to stimulate industrial demand and address sector-specific bottlenecks.
Analysts will be keenly awaiting subsequent months' data to determine if October's performance was an aberration or the beginning of a more sustained period of industrial sluggishness in the Indian economy.
